06 May Trump Administration Presses Ahead with Plan to Slash Safety-Net Hospital Funding
By 340B Matters
Even as health care providers risk their lives in the fight against COVID-19, the Trump administration is pressing ahead with a plan to slash funding to safety-net hospitals on the front lines.
From Kings County Hospital Center in New York to Mercy Hospital & Medical Center in Chicago to California Hospital Medical Center in Los Angeles, America’s healthcare system is under heavy strain. Yet even as the Blue Angels and Thunderbirds conduct flyovers around the country in tribute to COVID-19 first responders, the Center for Medicare and Medicaid Service (CMS) is working in Washington to cut a critical revenue lifeline for these heroes.
In recent weeks, CMS has asked hospitals in the 340B drug discount program to complete a complex survey on acquisition costs by May 15. More troubling than the ugly timing of the request in the midst of a global pandemic is the intent of the questionnaire.
CMS wants to cut the amount Medicare pays to safety-net hospitals for medicines, thus depriving them of critically important savings generated by the 340B Drug Discount Program. This program requires drug companies to sell medicines at a discount to health providers that treat high numbers of uninsured, underinsured and indigent patients.
CMS previously tried to reduce payments in 2018 when it lowered outpatient Medicare reimbursements to safety-net hospitals by 30 percent, but a federal judge ruled in September 2019 that the agency exceeded its authority and must pay back the funds.
But CMS hasn’t given up. Advocacy groups fear the survey is a new attempt to undermine a program that has helped safety-net providers treat the underserved for almost 30 years.
“CMS’s plan to collect actual acquisition cost data from only 340B hospitals suggests that the agency intends to continue down a policy path to abrogate the program, undermining the 340B statute,” wrote the American Hospital Association in a March 9 letter to CMS Administrator Seema Verma.
If CMS were to pay safety-net hospitals only at acquisition cost for medicines, the benefits of the 340B program would disappear and many providers would likely drop out. CMS’s plan could ultimately put hospitals – particularly rural ones—out of business, and many healthcare first responders out of work.
So why would the Administration move forward with such a plan, especially now? Perhaps it is not a coincidence that while rural hospitals would be the big losers, Big Pharma would be a clear winner. Drug manufacturers have been trying to kill the 340B Drug discount program for years because it eats into the industry’s excessive profits.
At a time when the Trump administration should be showing support for those putting their lives on the line to help others, it is indefensible to push a policy that would eliminate an important funding source for safety-net hospitals and deliver a tied-in-a-bow gift to one of the most profitable industries in America.
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